Factories Around The World Consume More Equipment

As a group, the world’s top industrialized nations increased their
pace in installing productive new machine tools by an average of 16
percent in 2007.

The standout, once again, is the
People’s Republic of China. Since 2002, it has ranked at the top in
consumption, and last year its $15.4 billion worth of installations
grew by $2.3 billion. For perspective, that year-to-year increase was
higher than total machine-tool consumption in, say, Brazil or India or
Mexico. The 17-percent growth in Chinese consumption follows several
years of double-digit percentage increases, some as high as 40 percent
per annum. Simply put, China took in nearly a quarter (23 percent) of
the value of all machine-tool production tracked last year in our
annual survey.

Top Consumers: Value Of Machine Tools Installed, In Millions Of U.S. Dollars, 2007 (estimated)

Country

Consumption

Change*

1.

People&rsquo;s Rep. of China

15,390.0

17%

2.

Japan

7,619.4

-2%

3.

Germany

7,252.1

29%

4.

United States

6,171.8

-3%

5.

Italy

5,056.0

22%

6.

South Korea

4,150.0

3%

7.

Taiwan

3,785.0

31%

8.

Brazil

1,822.2

28%

9.

India

1,774.8

36%

10.

Mexico

1,669.6

34%

11.

France

1,621.5

3%

12.

Switzerland

1,282.9

14%

13.

Spain

1,260.9

5%

14.

Turkey

1,161.4

9%

15.

Canada

967.7

-9%

16.

United Kingdom

938.2

6%

17.

Austria

795.0

14%

18.

Czech Republic

652.4

30%

19.

Russia

601.7

0%

20.

Belgium

561.5

18%

21.

Netherlands

498.2

10%

22.

Australia

370.0

0%

23.

Sweden

338.0

-2%

24.

Romania

313.4

12%

25.

Finland

233.0

9%

26.

Argentina

163.8

13%

27.

Croatia

159.0

0%

28.

Denmark

146.4

-4%

29.

Portugal

124.4

5%

* = Change from 2006, measured in reporting currency

Source: Gardner Publications, Inc.

Top Producers: Value Of Machine Tool Shipped, In Millions Of U.S. Dollars, 2007 (estimated)

Country

Output

Change*

1.

Japan

14,443.5

8%

2.

Germany

12,725.4

15%

3.

People&rsquo;s Rep. of China

10,090.0

43%

4.

Italy

7,272.7

17%

5.

South Korea

4,550.0

11%

6.

Taiwan

4,378.0

14%

7.

United States

3,578.0

-3%

8.

Switzerland

3,323.8

7%

9.

Spain

1,436.8

7%

10.

Brazil

1,157.8

21%

11.

France

1,087.8

-1%

12.

Austria

1,023.5

29%

13.

United Kingdom

682.2

-19%

14.

Czech Republic

677.1

30%

15.

Turkey

532.7

25%

16.

Netherlands

511.5

10%

17.

India

483.6

19%

18.

Belgium

422.5

9%

19.

Canada

357.4

-30%

20.

Finland

329.8

10%

21.

Sweden

232.6

7%

22.

Russia

202.2

11%

23.

Mexico

166.4

36%

24.

Australia

160.0

8%

25.

Denmark

105.4

5%

26.

Croatia

98.0

0%

27.

Romania

69.4

0%

28.

Portugal

67.6

5%

29.

Argentina

31.8

10%

* = Change from 2006, measured in reporting currency

Source: Gardner Publications, Inc.

Nor was China alone in its growth. In other parts of Asia, Taiwan
(seventh place, at 31 percent) and India (ninth place, at 36 percent)
also saw exceptional increases in new cutting and forming machines
shipped into their metalworking factories (see top consumers table).
Significant percentage increases were also seen in Germany, Italy, and
Brazil.

The
great majority of the 29 countries in this year’s survey showed an
increase in consumption. Consumption, in this case what economists call
“apparent consumption,” is derived from taking production from a
country’s own machine tool factories, adding its imports and
subtracting its exports. What remains is assumed to have been
installed, or consumed, internally.

The United States
produced $3,578 million in its own machine tool factories; brought in
$4,254 million from Japan, Germany, Taiwan and others; and shipped out
$1,660 million to customers in Mexico, Canada, China and others. So,
America can be said to have consumed $6,172 million worth in 2007. That
number, however, is down 3 percent from the previous year’s
consumption. Were that decline to become a trend, it could mean more
erosion of the manufacturing base in the U.S., which until the year
2000, had been far and away the world’s leading consumer.

Keeping
America internationally competitive in metalworking by installing new,
up-to-date factory equipment is a key reason many manufacturing
executives are praising the economic stimulus package that Congress
passed and the president signed into law in February. The new law
offers firms bonus depreciation for new capital expenditures, such as
machine tools that are put into service this year, and it boosts how
much small businesses can write off for new equipment.

If
tax incentives are one reason to be at least a little bullish about
U.S. factory-equipment installations, another would be the fact that
orders have continued to grow. Tracked by a monthly survey conducted
jointly by the American Machine Tool Distributors’ Association and
AMT—The Association for Manufacturing Technology, U.S. bookings for
selected machinery types actually rose during 2007, increasing backlogs
in some instances.

Turning to the other side of the World
Machine Tool Output & Consumption Survey—that is, the production
side—global output increased to $70,986 million in 2007, a percentage
gain similar to that seen on the consumption side. Of that $71 billion,
73 percent represents metalcutting machine tools including lathes and
machining centers, and 27 percent represents metalforming machine tools
such as presses.

Japan continues to lead the world in
shipments of new machines, with Germany a close second (see top
producers table). Third-place producer China saw a tremendous surge in
output last year as its domestic factories, which had been pressured by
a ravenous local appetite, cranked up output by more than 40 percent
over the previous year. The country’s imports declined a bit in 2007,
as Chinese demand was increasingly supplied by Chinese output,
reversing a trend. But despite slowing imports, China remains the
world’s largest machine tool importer, ahead of the United States and
Germany. Among the other top-ten producers, notable gains were made
by Italy, Germany and Taiwan. Moreover, exchange-rate shifts further
magnified the gains made by euro-denominated currencies after
converting to U.S. dollars. The ranking order of the top-ten producers
remained unchanged this year, with the exception that Brazil moved
ahead of France.

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